Amazing e-Commerce Business in China

I just reviewing some online commerce website in China and give me an idea to write down a new topic in here. Anyway, ref to China Internet Research Centre (in Beijing?) there are 55 Million of China’s Internet users shopped online last year for a total turnover of around RMB60 Billion (amazing!). Also some news said that by 2011, online spending will hit around RMB400 Billion as more of China’s Internet users turn to online shopping. Although, I have read that level of online spending remains modest: last year it was about RMB1,000 last year per consumer, or around 0.6% of total retail spending in China.

Somehow, growth in its e-commerce has lagged due to consumer concerns about reliable online payment methods and counterfeit goods. Nevertheless improvements in technology have meant that online payment systems are now safer and the challenge for Internet firms is to win over consumers’ confidence.

Next question: How?

I just try to review that another challenge of Internet companies in China face is the small number of credit card users, with around 75 million credit cards (ref State China Banking Media report) in circulation by the end of 2007. Although credit cards are becoming more popular (they even try me, although I am foreigner in here), their still low penetration rates along with quality controls and infrastructure issues explain why online sales in China last year made up little more than around 6% of that in United States.

Sample that I have seen showing, to overcome this issue, online business-to-business portal like Alibaba has been relatively successful with "Alipay", a system which allows users to pay in escrow only once the product has been received (they just like a virtual BANK!)

Next question: Central Bank policies?

Also, Taobao.com, a subsidiary of online portal Alibaba.com, in which Yahoo! invested around 1 Billion dollars in 2005, is China’s dominant Internet retailer, somehow accounting for around 80% of the country’s e-commerce turnover (vs Amazon or eBay?). This site had sales of around RMB40 Billion in 2007; most of it in consumer-to-consumer transactions, but its profitability remains in question as it does not charge buyer or seller a transaction fee.

Next question: Any service fees regarding debt issues?